Fannie Mae Makes Change To Student Loan Calculation

Fannie Mae made a change that will substantially help those who have student loans qualify for a mortgage. Previously, 1% of the loan balance counted against the borrower (e.g., $50,000 in student loans = $500 for monthly debt).

This rule applied despite some people having income-based repayment plans, or other plans that yielded much lower monthly payments than 1%.

With this new Fannie Mae release, we can now use the payment reflected on the credit report, which is usually much lower than the 1% calculation.

What does this mean to you?

If you were unapproved because of student loans, it’s possible you may be able to get approved now,

If you were approved but wanted to be approved for more, that may now be possible,

Real estate agents should consider revisiting clients who may have been previously denied due to student loans.